S7a-Overview of tariff revision process-RC
Download
Report
Transcript S7a-Overview of tariff revision process-RC
Overview of tariff revision
process under Regulatory
Commission
Prayas - EGI Skill-share workshop for Tajikistan and
Kyrgyzstan Delegates
November 16-18, 2010, Pune, India
Prayas Energy Group
www.prayaspune.org/peg, [email protected]
Tariff revision
17 Nov 2010
Prayas EGI Workshop - Pune 2010
2
Agenda
Tariff revision process and principles
Tariff proposal and cost components
Tariff structure
17 Nov 2010
Prayas EGI Workshop - Pune 2010
3
Procedure
Step 1: Application by
company
• Details of cost
• Proposed tariff structure
Step 2: Preliminary scrutiny
by commission
• Check procedural compliance and completeness of the
application
Step 3: Technical Validation
Session
• Ensure consistency of information demand additional data
if necessary, Consumer representatives participation
Step 4: Public notice and
availability of all documents
• Dissemination of information, all data and application
available at six locations, website, local language summary
Step 5: Public hearings at six
locations
• Commission hears objections and suggestions from
consumers and utility’s response to the same
Step 6:Tariff order issued by
commission
• Company proposal public comments utility response
to comments commission’s analysis and ruling
17 Nov 2010
Prayas EGI Workshop - Pune 2010
4
Tariff principles
Company to recover all reasonable and
efficient costs plus allowed profits
Revenue requirement = cost + profit
Reduction of cross-subsidy
No tariff shock to any consumer category
Development considerations
Affordability of small and agriculture
consumers
17 Nov 2010
Prayas EGI Workshop - Pune 2010
5
Tariff proposal and cost
components
Past performance
Projections for next year/period
Sales & revenue
Costs and expenses
Compliance with directives
Performance norms
Energy losses
Supply quality
Sales
Revenue at current tariff + Non-tariff income
Costs and revenue gap/surplus
Proposed improvements in performance
17 Nov 2010
Prayas EGI Workshop - Pune 2010
6
Cost components for
distribution business
Power purchase cost
Transmission charges
Capital expenditure and related costs
Interest on long term loan
Depreciation
Operation and maintenance cost
Employee cost
Administration costs
Repair and maintenance
17 Nov 2010
Prayas EGI Workshop - Pune 2010
7
Generation tariff components
Fixed cost
Loan repayment
Depreciation
Operations and maintenance cost
Variable costs
Fuel related expenses
Linked to performance norms such plant
availability, load factor, station heat rates, etc
17 Nov 2010
Prayas EGI Workshop - Pune 2010
8
Basis for cost components
Tariff regulations
Normative debt equity ratio of 70:30
Fixed return on equity e.g. 16% for distribution and
14% for generation and transmission
Depreciation schedule for various equipments/assets
In-principle clearance mechanism for capital
expenditure
Normative interest schedules
Performance norms and standards
17 Nov 2010
Prayas EGI Workshop - Pune 2010
9
Tariff structure
17 Nov 2010
Prayas EGI Workshop - Pune 2010
10
Industry tariffs: fixed and
variable charges
17 Nov 2010
Prayas EGI Workshop - Pune 2010
11
Other forms of tariff
Time of day tariff
Fuel adjustment cost
17 Nov 2010
Prayas EGI Workshop - Pune 2010
12
Tariff determination
Art and science
Specific objectives to be achieved
Cost recovery
Company efficiency
Investment attractions
Social considerations: affordability of small and
marginalized groups
Increased consumer confidence and increased
acceptance of tariff order
17 Nov 2010
Prayas EGI Workshop - Pune 2010
13
Questions and comments!
17 Nov 2010
Prayas EGI Workshop - Pune 2010
14